Undesirable business practices; misleading conduct; liability of principal and agent.
Facts: Yorke entered into negotiations to purchase a record shop from Treasureway Stores Pty Ltd. Treasureway appointed a company, Ross Lucas Pty Ltd (Ross Lucas), to act as its agent in the negotiations. Ross Lucas sought and obtained financial information about the record store from Treasureway and passed this information on to Yorke. However some of the information given by Treasureway, and passed on to Yorke by Ross Lucas, was incorrect, in particular, a statement that the weekly turnover of the record shop was $3,500. Yorke relied on this information and suffered loss as a result. Yorke sued Treasureway and its agent, Ross Lucas, for conduct in breach of s 52 of the Trade Practices Act 1974 (Cth).
Issue: Were both Treasureway and Ross Lucas liable for misleading conduct?
Decision: The court held both Treasureway and Ross Lucas liable for a breach of s 52 of the Trade Practices Act.
Reason: In the case of Ross Lucas, it was no defence to claim that the misleading information was given to Yorke without negligence and in the belief that it was true. The court considered the comments of Gibbs C.J. in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191, where he said [at 197]:
"A corporation which has acted honestly and reasonably may therefore nevertheless be rendered liable to be restrained by injunction, and to pay damages, if its conduct has in fact misled or deceived or is likely to mislead or deceive. The liability imposed by [s] 52, in conjunction with [s] 80 and 82, is thus quite unrelated to fault."
To avoid liability, Ross Lucas should have disclaimed responsibility for the accuracy of the information when he passed it on to Yorke.
Note: Although this case concerns s 52 of the Trade Practices Act, it continues to be relevant with regard to the interpretation and application of s 18 of the Australian Consumer Law.